ACIT, CENTRAL CIRCLE- 15, NEW DELHI V. MSG FINANCE INDIA PVT. LTD. , NEW DELHI

ITA 2270/DEL/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 3271 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 01-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Search and seizure; Reason to believe
• Section: 131; 37; 132; 142(1); 153A; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI Before Sh. A. D. Jain, Vice President Dr. B. R. R. Kumar, Accountant Member ITA No. 2270/Del/2018 : Asstt. Year : 2011-12 ACIT, Central Circle-15, New Delhi-110055 Vs MSG Finance India Pvt. Ltd., 201-H, Gautam Nagar, New Delhi-110049 (APPELLANT) (RESPONDENT) PAN No. AAACM9766E Assessee by : Sh. V. K. Agarwal, AR & Ms. Shweta Bansal, CA Revenue by : Sh. Bhavnesh Kulsheshtha, CIT DR Date of Hearing: 11.05.2022 Date of Pronouncement: 26.07.2022 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by the Revenue against the order ld. CIT(A)-XXVI, New Delhi dated 03.01.2018. 2. A search & seizure operation u/s 132 of the I. T. Act, 1961 was carried out on 28.03.2015 in the case of M.M Aggarwal Group of cases. The case of the assessee was also covered in the search. During the course of search carried out at the different premise located in India in M.M Aggarwal Group of cases, documents and data storage devices, etc. belonging to the assessee were found and seized. 3. Consequent upon search and centralization, a notice u/s 153A of the Income-tax Act, 1961 was issued to the assessee on 17.11.2016 which was duly served on the assessee. The ITA No. 2270/Del/2018 MSG Finance India Pvt. Ltd. 2 return of income u/s 153A of the Act was filed by the assessee on 26.11.2016 declaring loss of Rs.1,56,533/-. 4. Grounds of the revenue pertains to the adjudication by the ld. CIT(A) that no search u/s 132 was undertaken in this case. 5. The operative para of the order of the Ld. CIT(A) is as under: “I have perused the search warrant sent by the AO vide letter dated 01.12.2017 which though contained the name of the assessee yet it was served at the address “Plot No, 237-238, Udyog Vihar, Phase-I, Gurgoan”. This is the address of factory premises of M/s Heritage Beverages Pvt. Ltd. It is a fact that the address of the assessee was “201H, Gautam Nagar, New Delhi”. Earlier the address of the assessee was H-2/56, Mahavir Enclave, New Delhi. The assessee has changed its address from H-2/56, Mahavir Enclave, New Delhi to 201-H, Gautam Nagar, New Delhi on 31.12.2011, i.e., much before than the date of search. The same is evident from Form 18 filed before ROC in respect of change in address. Further, the Ld. AR has filed a copy of income tax return and annual return filed before ROC just prior to the date of search, i.e., A.Y. 2014-15 and just after the date of search, i.e., A.Y. 2015-16 which clearly evidences that at the time of search the address of the appellant was U201U, Gautam Nagar, New Delhi” and not “Plot No, 237-238, Udyog Vihar, Phase-I, Gurgoan”. Even the AO though fully in the knowledge of correct address being of Gautam Nagar yet did not bring out any connection of the assessee with the Udhyog Vihar address. In view of these facts, it is conclusively proved that no search was conducted at the premises of the appellant.” ITA No. 2270/Del/2018 MSG Finance India Pvt. Ltd. 3 6. We have perused the warrant of authorization u/s 132 of the Income Tax Act, 1961 (Warrant No. 4859) wherein the name of the assessee “MSG Finance India Pvt. Ltd.” has been duly mentioned. The relevant part of the warrant of authorization u/s 132 of the Income Tax Act, 1961 is as under: ---------------- If summons under sub-section (1) of Section 37 of the Indian Income-tax Act, 1922 or under sub-Section (1) of Section 131 of the Income Tax Act, 1961, or a notice under sub-section (4) of Section 22 of the Income Income-tax Act, 1922, or under sub- section (1) of section 142 of the Income Tax Act, 1961 is issued to xxxx, yyyy, zzzz, ,MSG Finance India Pvt. Ltd., mmmm, gggg...... [name of the person] to produce, or cause to be produced, books of accounts or other documents which will be useful for, or relevant to, proceedings under the Indian Income-tax Act, 1922, or under the Income Tax Act, 1961, he would not produce, or cause to produced, such books of account or other documents are required by such summons or notice. Sarvashri/Shri/Shrimati xxxx, yyyy, zzzz, ,MSG Finance India Pvt. Ltd., mmmm, gggg...are/is in possession of any money, bullion, jewellery or other valuables articles or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be disclosed for the purposes of the Indian Income-tax Act, 1922, or the Income Tax Act, 1961; And whereas I have reason to suspect that such books of accounts, other documents, money, bullion, jewellery or other valuable articles or thing have been kept and are to be found in Plot No. 237- 238, Udyog Vihar, Phase-1, Gurgaon (Specify particulars of the building /place/ vessel/ vehicle/ aircraft); ITA No. 2270/Del/2018 MSG Finance India Pvt. Ltd. 4 This is to authorize and required you......-as per overleaf ..................... [Name of the Deputy Director or of the Deputy Commissioner or of the Assistant Director or of the Assistant Commissioner or the Income Tax Officer] a. To enter and search that building/place/vessel/aircraft. 7. The said warrant No. 4859 has been duly seen and signed by Shri Pradeep Kumar, Director of MSG Finance India Pvt. Ltd. and also by two independent witnesses. 8. A bare reading of the warrant proves that it has been issued after due satisfaction that summons under sub-Section (1) of Section 131 of the Income Tax Act, 1961 are issued. The assessee would produce the documents as required. The warrant is also based on the satisfaction that the assessee company is in position of material which has not been disclosed for the purpose of Income Tax Act, 1961. The warrant reveals that the issuing authority has reason to suspect that such valuable things are kept and are to be found at Plot No. 237/238, Udyog Vihar, Phase-1, Gurgaon and authorized the Officers of the Department to enter and search such place. The 9. Further, we have also gone through the provisions of Section 132 of the Income Tax Act, 1961 which is as under: “Search and seizure. 132. (1) Where the Principal Director General or Director General or Principal Director or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner in consequence of information in his possession, has reason to believe that— ITA No. 2270/Del/2018 MSG Finance India Pvt. Ltd. 5 (a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub- section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub- section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or (b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income- tax Act, 1922 (11 of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), then,— (A) the Principal Director General or Director General or Principal Director or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, may authorise any Additional Director or Additional Commissioner or Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, or ITA No. 2270/Del/2018 MSG Finance India Pvt. Ltd. 6 (B) such Additional Director or Additional Commissioner or Joint Director, or Joint Commissioner, as the case may be, may authorise any Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, (the officer so authorised in all cases being hereinafter referred to as the authorised officer) to— (i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept; (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available; (iia) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing;” Further, the sub-section (4) of Section 132 read as under: “(4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. Explanation.—For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not ITA No. 2270/Del/2018 MSG Finance India Pvt. Ltd. 7 merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act.” 10. The fundamentals behind the issue of authorization u/s 132 of the Income Tax Act, 1961 and Rule 112(1) of the Income Tax Rules, 1962 can be summarized as under: a. The warrant issuing authority has reasons to believe that issue of notice u/s 131 would not result in fruitful outcome. b. The warrant issuing authority has reasons to believe that issue of notice u/s 142(1) would not result in appropriate compliance. c. There is a belief that the assessee has not disclosed taxable income for the taxation purpose. d. There is a belief that the assessee would not disclose taxable income for the taxation purpose. e. There is a reason to suspect that evidences pertaining to such taxable income are kept at different buildings/premises. f. Hence, the warrant is issued to search any such buildings/premises to enter, indentify, examine, seize, inventorise all such evidences viz. books of accounts, documents, money, bullion, jewellery or other valuable article or thing. 11. From the above, it is very clear that a warrant can be issued in the name of any assessee to search any place where ITA No. 2270/Del/2018 MSG Finance India Pvt. Ltd. 8 the documents pertaining to the assessee have been kept or are to be found as per the satisfaction of the warrant issuing authority. 12. In the instant case, the warrant has been issued in the name of the assessee and the premises namely “Plot No. 237- 238, Uydog Vihar, Phase-1, Gurgaon” is the place where the warrant issuing authority had belief and had reasons to suspect that the documents and evidences leading to evasion of tax pertaining to the assessee have been kept or are to be found as per the satisfaction of the warrant issuing authority. The Director of the company has seen the warrant, signed and was present throughout the search procedure which can be observed by going through the warrant of authorization. Hence, the warrant is said to be rightly issued and search on the assessee has been correctly took place. 13. The observations of the ld. CIT(A) that there was no warrant executed at the address mentioned in the ROC record or the other address of the assessee and hence “no search was conducted” goes against the fundamentals of issue of warrant of authorization u/s 132. It is not necessary that warrant has to be issued only at /on the premises of the registered office of the company or corporate office, factory or godown but a warrant can be authorized to any other place where the issuing authority satisfies and reasons to suspect that the material/evidences pertaining to the assessee have been kept and are to be found. The ld. CIT(A) ignored the provisions of Section 132(1), the proviso under clause (B), provisions of (1A) which clearly deal with the jurisdiction, the premises and the actions that can be taken by the revenue authorities. ITA No. 2270/Del/2018 MSG Finance India Pvt. Ltd. 9 14. Hence, we hold that the decision of the ld. CIT(A) that “no search was conducted” on the assessee and summarily nullifying the proceedings u/s 153A as “ex-facie illegal” is devoid of any merit and cannot be sustained. 15. The ld. CIT(A) is hereby directed to adjudicate the grounds on merits of the case. 16. In the result, the appeal of the revenue is allowed for statistical purpose. Order Pronounced in the Open Court on 26/07/2022. Sd/- Sd/- (A. D. Jain) (Dr. B. R. R. Kumar) Vice President Accountant Member Dated: 26/07/2022 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR